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Amazon says its Prime membership has now topped more than 200m – and focuses on groceries and delivery as first quarter sales grow by 44%

Prime membership tops 200m. Image courtesy of Amazon

Amazon says more than 200m people are now paid-up members of its Amazon Prime subscription scheme. Its next Prime Day event, for members of the scheme, is now set to take place later this quarter.

The update came as Amazon reported sales of $108.5bn (£78.03bn) in the first quarter of its financial year – up by 43.7% from from $75.5bn (£54.3bn) a year earlier. Net income grew by 224% to $8.1bn (£5.82bn), up from $2.5bn (£1.8bn) a year earlier. Looking ahead, second quarter sales are expected to come in at between $110bn (£79.1bn) and $116bn (£83.4bn) – a rise of between 24% and 30% on the same time last year. 

During the quarter the retailer opened its first three UK Amazon Fresh grocery stores, taking it to a total of 15 around the world. The stores use Amazon’s ‘just walk out’ technology and stock goods including those produced for the new ‘by Amazon’ own-brand.

UK shoppers can also use a new Amazon Discover Rooms immersive shopping experience to browse and buy from thousands of domestic room designs from their own device. This market is one of nine in which the experience is now available.

Other recent Amazon innovations include the ability to chat live with stylists when using Amazon Prime Wardrobe, and the launch of Amazon One palm payments at the Whole Food Markets store in Seattle. 

The retailer also says it continues to innovate and invest in fast delivery. Its electric autonomous Amazon Scout robotic delivery vehicle has now delivered tens of thousands of parcels in the US and continues to expand in Amazon’s home market. 

The retailer is both growing its Amazon Air fleet to an expected 85 planes by the end of 2022, and working towards an early 2025 date to power all of its businesses with 100% renewable energy. Its 206 renewable energy projects around the world include both wind and solar projects, and the retailer says it is the largest corporate purchaser of renewable energy both around the world and in Europe. The Climate Pledge Fund that it co-founded has invested in a renewable electrofuels provider, Infinium – but it is not yet clear how Amazon Air will power its growing fleet of planes by renewable energy. 

In the Indian market, the retailer says more than 50,000 offline and local retailers joined its Local Shops programme in its first year. It is now aiming to help more than a million shops join the scheme by 2025. 

And films produced by Amazon Studios won three Golden Globes and two Oscars. 

Amazon founder and chief executive Jeff Bezos says: “As Prime Video turns 10, over 175m Prime members have streamed shows and movies in the past year and streaming hours are up more than 70% year over year.”

Amazon Web Services’ role of providing technology to third-party businesses, including retailers, has helped to boot growth. 

Bezos says: “In just 15 years, AWS has become a $54bn (£38.3bn) annual sales run rate business competing against the world’s largest technology companies, and it’s growth is accelerating – up 32% year over year. Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf. “

Industry reaction

Andy Halliwell, senior director, retail and retail analyst at digital consultancy Publicis Sapient, says:  “This remarkable revenue growth, if anything, understates the actual size of the revenue since 55% of sales in Q4 flowed directly to third party sellers. For context, this means their gross merchandise value already makes them the largest retailer in the world, easily surpassing Walmart by nearly $300bn in 2020.

“Amazon is without a doubt, one of the most innovative and exciting companies in the world, relentless in its pursuit of new products and disrupting the entire retail landscape. Their major bets on maintaining product availability during the Covid demand peaks, advertising and marketing, and their major push into groceries – in partnership with Morrison’s in the UK – positions them well for future growth.  And with continued top-line growth expected in Q2, Amazon has used the global pandemic to further strengthen its position.”

Paul Kirkland, retail and hospitality business development director at Fujitsu, says: “The stellar results from Amazon aren’t surprising, particularly as the pandemic caused a rapid acceleration in the amount of time consumers spend online. While many businesses faltered in trying to meet increased customer demand, Amazon delivered again and again – with its steadfast supply chain and seamless online infrastructure holding firm for the whole year.

“And Amazon’s success will likely continue despite stores reopening, now that customers have become accustomed to the ease, variety and competitive pricing the eCommerce platform offers. Its next-day delivery has set the benchmark for all online shopping experiences and has caused the brand to become synonymous with impeccable customer service; with many retailers now looking to replicate this in their own offering. Not only that, but a handful of retailers now want to cash in on the global audience the brand demands by featuring on the platform to enhance their sales funnel; something that’s also helped to bolster Amazon’s Q1 results.

“Looking ahead, retailers can learn a lot from Amazon; how to sustain growth through customer service and innovate to pique interest. If retailers want a slice of the eCommerce market, sprucing up their online marketplaces and freshening up their digital offerings is vital to cashing in on the UK’s pent-up demand.”

Hugh Fletcher, global head of consultancy and innovation at Wunderman Thompson Commerce, says: “Amazon’s success has always been built on its vast digital marketplace so its most recent quarterly results are indicative of a company that has taken advantage of a more digital, post-Covid-19 world in its eCommerce base, as well as successes in its cloud venture. Yet as countries look to recover from the economic impact and reopen their high-streets, Amazon faces a renewed challenge to retain the customers that it gained over the past year; this is especially true as consumer confidence increases thanks to the global vaccine rollout. High-street retailers will also need to reassure shoppers who are fearful of physical retail, with 48% scared about in-store shopping last year. However, the signs are already pointing towards a busier high street in 2021. 

“This could explain why Amazon Go launched across London; three frictionless, physical stores that use Amazon Fresh technology to give the ecommerce giant a physical presence and allow it to expand even further into the UK market. Customers will be hard-pressed to find a more convenient small basket shopping experience, especially during a period where consumers are conscious of what they touch and general hygiene. There’s no denying that Amazon’s Go service is its way to expand into the high-street and keep consumers engaged in its marketplace.”

Amazon is an Elite retailer in RXUK Top500 research.

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